ARE 5.0 Practice Management UPDATED
Exam Questions and CORRECT Answers
Sole Proprietorship - Correct Answer- The business is owned by an individual
General Partnership - Correct Answer- Two or more people (general partners) share in the
management, profits and risk of the business
Limited Partnership - Correct Answer- Has at least one general partner (invests in the
business, manages it and are financially responsible for it) and at least one limited partner
(investor who receives a portion of the profits but has no say in the management of the
company)
C Corporation - Correct Answer- An association of individuals (stockholders, directors and
officers) that exists as a legal entity apart from its members
Stockholders - Correct Answer- Owners of the corporation in proportion to the number of
shares they own
Directors - Correct Answer- Have the fiduciary duty to act in the best interest of the
stockholders and are responsible for broad policy decisions
Officers - Correct Answer- Carry out the day-to-day management of the corporation
S Corporation - Correct Answer- A corporation that chooses to allocate it's income and losses
directly to shareholders in proportion to their holdings. Limited to small business
corporations with less than 100 shareholders.
Professional Corporation - Correct Answer- Similar to other corporations except that liability
for malpractice is limited to the person responsible for the act.
Limited Liability Company (LLC) - Correct Answer- Business structure that combines the
advantages of a partnership or sole proprietorship with the limited liability of a corporation.
(Aka LLP Limited Liability Partnership)
, Joint Venture - Correct Answer- A temporary association of two or more persons or firms for
the purpose of completing a specific project or achieving a specific goal
Teaming Agreement - Correct Answer- Defines the roles, responsibilities and contractual
relationships that will be established if the firms are awarded the project and the joint venture
is formed. (Aka Memorandum of Understanding)
Memorandum of Understanding - Correct Answer- Defines the roles, responsibilities and
contractual relationships that will be established if the firms are awarded the project and the
joint venture is formed (Aka Teaming Agreement)
Standard of Care - Correct Answer- The level of skill and diligence that a reasonably prudent
architect would exercise in the same community, in the same time frame, and given the same
or similar facts and circumstances
Departmental Organization - Correct Answer- Staff is organized into departments, each of
which specializes in a different function. A project moves from one department to another in
its route from start to finish (Horizontal Organization or Flat Organization)
Studio Organization - Correct Answer- Staff is organized in groups called studios. Each
studio is responsible for completing an entire project (Vertical Organization or Tall
Organization)
Outsourcing - Correct Answer- Contracting with another company to do some of the work
needed for a project
Support Staff - Correct Answer- Employees other than the professional staff and senior
management
Business License - Correct Answer- Allows the business to practice and usually serves as a
basis for taxation
Certificate of Authorization (COA) - Correct Answer- Some states require a firm to obtain
this in order to offer services to the public
Exam Questions and CORRECT Answers
Sole Proprietorship - Correct Answer- The business is owned by an individual
General Partnership - Correct Answer- Two or more people (general partners) share in the
management, profits and risk of the business
Limited Partnership - Correct Answer- Has at least one general partner (invests in the
business, manages it and are financially responsible for it) and at least one limited partner
(investor who receives a portion of the profits but has no say in the management of the
company)
C Corporation - Correct Answer- An association of individuals (stockholders, directors and
officers) that exists as a legal entity apart from its members
Stockholders - Correct Answer- Owners of the corporation in proportion to the number of
shares they own
Directors - Correct Answer- Have the fiduciary duty to act in the best interest of the
stockholders and are responsible for broad policy decisions
Officers - Correct Answer- Carry out the day-to-day management of the corporation
S Corporation - Correct Answer- A corporation that chooses to allocate it's income and losses
directly to shareholders in proportion to their holdings. Limited to small business
corporations with less than 100 shareholders.
Professional Corporation - Correct Answer- Similar to other corporations except that liability
for malpractice is limited to the person responsible for the act.
Limited Liability Company (LLC) - Correct Answer- Business structure that combines the
advantages of a partnership or sole proprietorship with the limited liability of a corporation.
(Aka LLP Limited Liability Partnership)
, Joint Venture - Correct Answer- A temporary association of two or more persons or firms for
the purpose of completing a specific project or achieving a specific goal
Teaming Agreement - Correct Answer- Defines the roles, responsibilities and contractual
relationships that will be established if the firms are awarded the project and the joint venture
is formed. (Aka Memorandum of Understanding)
Memorandum of Understanding - Correct Answer- Defines the roles, responsibilities and
contractual relationships that will be established if the firms are awarded the project and the
joint venture is formed (Aka Teaming Agreement)
Standard of Care - Correct Answer- The level of skill and diligence that a reasonably prudent
architect would exercise in the same community, in the same time frame, and given the same
or similar facts and circumstances
Departmental Organization - Correct Answer- Staff is organized into departments, each of
which specializes in a different function. A project moves from one department to another in
its route from start to finish (Horizontal Organization or Flat Organization)
Studio Organization - Correct Answer- Staff is organized in groups called studios. Each
studio is responsible for completing an entire project (Vertical Organization or Tall
Organization)
Outsourcing - Correct Answer- Contracting with another company to do some of the work
needed for a project
Support Staff - Correct Answer- Employees other than the professional staff and senior
management
Business License - Correct Answer- Allows the business to practice and usually serves as a
basis for taxation
Certificate of Authorization (COA) - Correct Answer- Some states require a firm to obtain
this in order to offer services to the public
